Post by upfromsumdirt on Dec 4, 2006 14:08:35 GMT -5
May 31, 2005
Tea Growers Turn over a New Leaf
A Historical Overview of Tea Production in Tanzania*
Rungwe Outgrowers Association members visit the tea fields of an exemplary association member The cultivation of tea in Tanzania began in 1902, when German settlers planted varieties of the crop at agricultural research stations in Amani and Rungwe. Commercial production commenced in the 1920s and jumped to significant levels after the Second World War, when British companies took over local plantations and used Tanganyika’s position within the Sterling Community to step up sales to the British Commonwealth.
By 1960, Tanzania’s total production of “made” tea had reached 3,700 tons, equivalent to 0.5 percent of the total world market.** Virtually all production at that time was managed by large-scale, expatriate-owned estates that operated their own processing plants.
Tea cultivation generally encourages the centralization of production and processing because freshly picked tea must be rapidly cut, steamed, curled and dried to retain the quality of its essential oils and the value of the product. Centralized tea estates - with an integrated network of feeder roads leading to high-capacity processing facilities - are thus the norm throughout most of Asia and Africa.
Nonetheless, smallholder production of tea is economically viable in situations where tea estates are willing to negotiate bulk purchases from neighboring producer groups or in situations where regional smallholder associations maintain their own processors and operate with enough efficiency to deliver inputs, services, and on-time payments to local producers.
Smallholder tea production emerged in Tanzania shortly after independence, when the government began encouraging rural farmers to cultivate the crop on small plots that averaged 0.3 hectares in size. The smallholders sold their production to local state-owned processing facilities or to local plantations. The expansion of smallholder cultivation received considerable international donor support, including two substantial World Bank loans. With this financial backing, smallholder production rose to 29 percent of Tanzania’s total annual harvest by the early 1980s.
The rapid growth of smallholder tea cultivation masked growing problems, however. In the 1960s, Tanzania had nationalized most of the country’s expatriate-owned tea plantations and processing facilities, and it had created a powerful Tea Authority that regulated the industry and imposed strict price controls. The price controls cut into the profits of smallholders and encouraged many farmers to abandon cultivation. Moreover, the general decline of Tanzania’s economy in the 1970s prevented the Tea Authority from investing in the maintenance and improvement of processing facilities, irrigation, rural feeder roads, and high-yielding tea hybrids. The result was the virtual collapse of smallholder tea production. By 1998, smallholder contributions to the national tea harvest had fallen to five percent.
Tanzania’s decision to transform its economic policy in the early 1990s prompted the rapid revival of estate-managed tea production. Majority shares in most of the nationalized estates were sold to Asian, South African, and European tea companies, and these sales encouraged an inflow of foreign direct investment that revitalized production on the large farms. The relaxation of price controls and the transformation of the Tea Authority into a research and regulatory body also stimulated production.
On the whole, however, smallholders were left out of this transformation. While the major tea farms invested in new crop inputs and renovations to transportation and processing facilities within the boundaries of their estates, smallholders lacked the resources or level of organization required to undertake similar improvements.
ADF Support for Smallholder Tea Associations and Outgrower Associations
The African Development Foundation has joined with other international donor organizations to help Tanzanian smallholder tea groups acquire the investment capital they need to establish revolving loan funds that can finance the purchase of new crop varieties and fertilizer by individual members. ADF is financing technical assistance that helps smallholder groups purchase training in business management, financial management, and price negotiation. Foundation funds also support local infrastructure improvements undertaken by producer associations, including the purchase of transportation vehicles and the improvement of feeder roads.
The revival of smallholder production in Tanzania is delivering benefits to family farmers by supplying independent producers with the resources they need to deliver a high-quality crop. It also benefits estates by creating additional sources of product supply.
Support for smallholder production is also improving the overall quality of Tanzanian tea and earning the national harvest higher prices in international tea auctions. Most Tanzanian tea is exported, and average prices for Tanzanian tea sold at the Mombasa tea auction have increased significantly relative to most other African teas over the past seven years.
New ADF Projects
In FY 2004, ADF provided grants to two Tanzanian smallholder associations to assist them in improving the quality of their product and the volume of their sales.
Grantee: Mkonge Tea Block Farm Cooperative Society
Country: Tanzania
Project Title: Improvement of Mkonge Outgrowers Tea Project
Amount: US $144,000
Duration: FY 2004-2008
The Mkonge Tea Block Farm Cooperative Society (MTBF) is an association of 500 farmers located in Mufindi District of Tanzania. While MTBF members have produced and sold a variety of crops for over thirty years, in 1991 they began to focus on the production and sale of green leaf tea. With technical assistance from the Tea Research Institute of Tanzania, MTBF members have improved their technical skills and are now able to produce an improved quality and quantity of tea. In addition, MTBF began a curing process that allows them to produce and sell a value-added product.
Map of Tanzania showing location of MkongeMTBF sells its tea to the Mufindi Tea Company (MTC), which markets internationally and is ready to purchase up to 3,400 tons of association members’ tea annually. To meet the MTC demand, members must increase their acreage and increase their yield per acre. ADF funds will help MTBF expand its production of tea to take advantage of market opportunities.
The project will provide MTBF with funds to improve its existing tea nursery and production facilities; expand its technical outreach program to farmers; improve the efficiency of its system for selling inputs to members; and improve the efficiency of its process for purchasing, processing, and marketing members’ tea. The project will establish a revolving loan fund to allow members to purchase critical inputs.
The project is expected to double MTBF’s net revenues over five years and allow the association to increase its membership from 373 to 500. It is also expected that members’ average annual cash income from tea sales will more than double, from US $115 to US $282. MTBF has agreed to contribute part of its profits to support village development projects in the communities where it operates.
Grantee: Rungwe Small Tea Growers Association
Country: Tanzania Project
Title: RSTGA Farm Inputs Project
Amount: US $239,144
Duration: FY 2004-2008
ADF is providing the Rungwe Small Tea Growers Association (RSTGA), which serves 14,000 family farmers in the Mbeya District of southwestern Tanzania, with US $239,144. RSTGA was established in 1998, and its members sell the bulk of their tea harvest to the Wakulima Tea Company, Limited (WATCO), of Mbeya.
Map of Tanzania showing location of RSTGAThe project will help RSTGA create a revolving loan fund to assist farmers in purchasing fertilizer, sprayers, pumps, and other equipment to improve the quality and quantity of their green tea yields. The ADF project will also assist RSTGA in establishing a tea plant nursery and implementing procedures that will improve the collection, drying, and marketing of members’ tea. The project is expected to nearly double the tea production of 2,105 farmers over the next five years and increase the average earnings of these farmers from 210,000 Tanzanian shillings (US $196) per year to 521,000 shillings (US $470). In 2003, Tanzania’s average per capita income was estimated at US $300.***
Tea Growers Turn over a New Leaf
A Historical Overview of Tea Production in Tanzania*
Rungwe Outgrowers Association members visit the tea fields of an exemplary association member The cultivation of tea in Tanzania began in 1902, when German settlers planted varieties of the crop at agricultural research stations in Amani and Rungwe. Commercial production commenced in the 1920s and jumped to significant levels after the Second World War, when British companies took over local plantations and used Tanganyika’s position within the Sterling Community to step up sales to the British Commonwealth.
By 1960, Tanzania’s total production of “made” tea had reached 3,700 tons, equivalent to 0.5 percent of the total world market.** Virtually all production at that time was managed by large-scale, expatriate-owned estates that operated their own processing plants.
Tea cultivation generally encourages the centralization of production and processing because freshly picked tea must be rapidly cut, steamed, curled and dried to retain the quality of its essential oils and the value of the product. Centralized tea estates - with an integrated network of feeder roads leading to high-capacity processing facilities - are thus the norm throughout most of Asia and Africa.
Nonetheless, smallholder production of tea is economically viable in situations where tea estates are willing to negotiate bulk purchases from neighboring producer groups or in situations where regional smallholder associations maintain their own processors and operate with enough efficiency to deliver inputs, services, and on-time payments to local producers.
Smallholder tea production emerged in Tanzania shortly after independence, when the government began encouraging rural farmers to cultivate the crop on small plots that averaged 0.3 hectares in size. The smallholders sold their production to local state-owned processing facilities or to local plantations. The expansion of smallholder cultivation received considerable international donor support, including two substantial World Bank loans. With this financial backing, smallholder production rose to 29 percent of Tanzania’s total annual harvest by the early 1980s.
The rapid growth of smallholder tea cultivation masked growing problems, however. In the 1960s, Tanzania had nationalized most of the country’s expatriate-owned tea plantations and processing facilities, and it had created a powerful Tea Authority that regulated the industry and imposed strict price controls. The price controls cut into the profits of smallholders and encouraged many farmers to abandon cultivation. Moreover, the general decline of Tanzania’s economy in the 1970s prevented the Tea Authority from investing in the maintenance and improvement of processing facilities, irrigation, rural feeder roads, and high-yielding tea hybrids. The result was the virtual collapse of smallholder tea production. By 1998, smallholder contributions to the national tea harvest had fallen to five percent.
Tanzania’s decision to transform its economic policy in the early 1990s prompted the rapid revival of estate-managed tea production. Majority shares in most of the nationalized estates were sold to Asian, South African, and European tea companies, and these sales encouraged an inflow of foreign direct investment that revitalized production on the large farms. The relaxation of price controls and the transformation of the Tea Authority into a research and regulatory body also stimulated production.
On the whole, however, smallholders were left out of this transformation. While the major tea farms invested in new crop inputs and renovations to transportation and processing facilities within the boundaries of their estates, smallholders lacked the resources or level of organization required to undertake similar improvements.
ADF Support for Smallholder Tea Associations and Outgrower Associations
The African Development Foundation has joined with other international donor organizations to help Tanzanian smallholder tea groups acquire the investment capital they need to establish revolving loan funds that can finance the purchase of new crop varieties and fertilizer by individual members. ADF is financing technical assistance that helps smallholder groups purchase training in business management, financial management, and price negotiation. Foundation funds also support local infrastructure improvements undertaken by producer associations, including the purchase of transportation vehicles and the improvement of feeder roads.
The revival of smallholder production in Tanzania is delivering benefits to family farmers by supplying independent producers with the resources they need to deliver a high-quality crop. It also benefits estates by creating additional sources of product supply.
Support for smallholder production is also improving the overall quality of Tanzanian tea and earning the national harvest higher prices in international tea auctions. Most Tanzanian tea is exported, and average prices for Tanzanian tea sold at the Mombasa tea auction have increased significantly relative to most other African teas over the past seven years.
New ADF Projects
In FY 2004, ADF provided grants to two Tanzanian smallholder associations to assist them in improving the quality of their product and the volume of their sales.
Grantee: Mkonge Tea Block Farm Cooperative Society
Country: Tanzania
Project Title: Improvement of Mkonge Outgrowers Tea Project
Amount: US $144,000
Duration: FY 2004-2008
The Mkonge Tea Block Farm Cooperative Society (MTBF) is an association of 500 farmers located in Mufindi District of Tanzania. While MTBF members have produced and sold a variety of crops for over thirty years, in 1991 they began to focus on the production and sale of green leaf tea. With technical assistance from the Tea Research Institute of Tanzania, MTBF members have improved their technical skills and are now able to produce an improved quality and quantity of tea. In addition, MTBF began a curing process that allows them to produce and sell a value-added product.
Map of Tanzania showing location of MkongeMTBF sells its tea to the Mufindi Tea Company (MTC), which markets internationally and is ready to purchase up to 3,400 tons of association members’ tea annually. To meet the MTC demand, members must increase their acreage and increase their yield per acre. ADF funds will help MTBF expand its production of tea to take advantage of market opportunities.
The project will provide MTBF with funds to improve its existing tea nursery and production facilities; expand its technical outreach program to farmers; improve the efficiency of its system for selling inputs to members; and improve the efficiency of its process for purchasing, processing, and marketing members’ tea. The project will establish a revolving loan fund to allow members to purchase critical inputs.
The project is expected to double MTBF’s net revenues over five years and allow the association to increase its membership from 373 to 500. It is also expected that members’ average annual cash income from tea sales will more than double, from US $115 to US $282. MTBF has agreed to contribute part of its profits to support village development projects in the communities where it operates.
Grantee: Rungwe Small Tea Growers Association
Country: Tanzania Project
Title: RSTGA Farm Inputs Project
Amount: US $239,144
Duration: FY 2004-2008
ADF is providing the Rungwe Small Tea Growers Association (RSTGA), which serves 14,000 family farmers in the Mbeya District of southwestern Tanzania, with US $239,144. RSTGA was established in 1998, and its members sell the bulk of their tea harvest to the Wakulima Tea Company, Limited (WATCO), of Mbeya.
Map of Tanzania showing location of RSTGAThe project will help RSTGA create a revolving loan fund to assist farmers in purchasing fertilizer, sprayers, pumps, and other equipment to improve the quality and quantity of their green tea yields. The ADF project will also assist RSTGA in establishing a tea plant nursery and implementing procedures that will improve the collection, drying, and marketing of members’ tea. The project is expected to nearly double the tea production of 2,105 farmers over the next five years and increase the average earnings of these farmers from 210,000 Tanzanian shillings (US $196) per year to 521,000 shillings (US $470). In 2003, Tanzania’s average per capita income was estimated at US $300.***
